Annuities

That Time Coach Knight Went Fishing at Practice


Annuities

Because I was a student manager for Indiana University’s basketball team, I’m often asked how practices were with Coach Bob Knight. As you can imagine, they were generally intense with little time wasted. But, many of them included invaluable life lessons for all involved. One such practice was during our Christmas break. Coach came out of his locker room with a fishing pole in hand. I automatically knew this practice was going to different. 

 

Coach spent 90 minutes talking about being aware of your surroundings for the best chance of success. He used the analogy of fly fishing in a river with a fast current. He moved around the basketball court, simulating how a fisherman might move. He said you have to be careful when stepping on slippery stones, as you need a steady frame to cast your line. And, you have to pay attention to the strength of the current, so your feet aren’t pulled out from under you. 

 

You have to gather all this information into your decision-making process as you fish. And, you have to practice. Coach would cast his line and land the bobber within 6 inches of his target. Every time. Years of repetition created muscle memory, so he was extremely accurate. 

 

Practice for Planners

Coach’s fishing analogy was true for basketball, and it’s also true for income planning in an investment portfolio. There are hundreds of risks associated with a retiree’s income plans, but longevity-related issues multiply the chances of running out of money. Each risk in longevity is its own stone covered by moss. The client can easily slip and get caught up in the current. After that, it’s hard to recover. The damage is already done. 

 

In planning, you have to constantly check the variables surrounding your clients, just as you would check for slippery rocks or pay attention to the speed of the current. You can reduce the impact of longevity by shifting your client’s risk. 

 

The cash flow pressure of a long-term care event can be mitigated with insurance or income riders that provide additional income. Annuities are the only vehicle that use mortality credits to boost income yield to the client, and income streams can be guaranteed through immediate or deferred income products. And, inflation protection can be reduced through riders on many annuities. 

 

Want to be as accurate as Coach Knight? You’ll need repetition. Make income planning a repeatable process in your practice, and you’ll be more efficient and effective with your clients. You’ll also improve retention and increase referrals. 

 

Winning Strategy

Navigate the planning process like a skilled fisherman. Eliminate or reduce as many slippery stones as possible. Watch your step so you don’t get caught up in the current. Shift the risks and make your client’s journey more predictable. 

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About the Author

Mike McGlothlin is a team leader, retirement industry activist and disciple of Indiana Hoosier basketball. In addition to being EVP of retirement at Ash Brokerage, he is a sought-after writer and speaker. His web series, “Winning Strategies,” provides insight and motivation for financial advisors in many forms – blogs, books, videos, podcasts and more. You can get his latest book, “Winning Strategies: The New Rules of Retirement Planning,” on Amazon. 

Retirement Practice Management Financial Planning

Shift the Risk, Not the Return


Annuities

Lately, I’ve spent a lot of time talking about pension risk transfers. I think it’s market that can explode over the next 12-18 months for any financial professional who is committed to talking to CEOs and human resources leaders. 

 

But, saving on premiums and taking a less valuable employee benefit off the table is only part of the benefit. The real benefit is the shifting of risk. Plan sponsors bear several risks that can be reduced or eliminated.

 

The Real Risks

Pension plan sponsors take on the investment risk of plan assets. Regardless of economic projections, managing risk will likely be more difficult within a plan for the immediate future. Rising interest rates will result in lower bond valuations. A choppy market will make it difficult to have steady returns necessary to hit funding targets. 

 

Life expectancies continue to increase in the United States. There is a requirement to pay the monthly income stated in the pension plan document. Regardless of how long the plan participant lives, the plan must meet that obligation. The problem is that the current funding status for many plans is below 100 percent, so the plan might not have enough assets to meet those obligations. 

 

The same problems exist for most retirees. They ask, “Do I have enough assets to generate the income that I need? And, will I live too long and exhaust those assets?” Unfortunately, business owners and leaders must answer that question for themselves, as well as for all their employees. The fact that business owners have an added responsibility for their employees’ retirement creates more stress and anxiety. 

 

Worth the Shift

These risks can be shifted through pension risk transfer. The process can be cost effective. It’s long, but it can be easy and seamless for business owners. There is little reason to keep risk on your balance sheet when there are alternatives. Unfortunately, most business owners don’t know about the options available to them. It makes a great conversation for you to have with business owners: Shift this risk, and you will gain the trust of the entire company. 

 

Winning Strategy

Shift the longevity risks for corporations in a similar fashion to individual retirement plans. Take away investment risks and the potential of living too long, and you’ll gain a corporate client plus all the employees.

Policy Review - 10 Ideas For Existing Life Insurance

Craving More?

Watch the replay of our webinar where we talk how pension risk transfers can be an effective tool for defined benefit plan sponsors seeking solutions for rising costs and longevity risk.

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About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of retirement at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”

Pension Risk Transfers Retirement Practice Management

Missing the Shot You Didn’t Take


Annuities

I can never resist talking basketball in the spring, especially around the NCAA tournament and the final stretches of the NBA season. 

 

For anyone who knows me, my recreational basketball skill set is focused on offense, not defense. Specifically, my game is played between the two 3-point lines. I usually don’t leave a game thinking I should have taken a shot but didn’t. A lot of coaches tell players that they will never make the shot that they don’t take. 

 

Recently, one of my best wholesalers posed a question to the rest of our sales team. He asked how often clients wish they had bought something a year ago but didn’t have the faith to make the decision. 

 

Think about how many people wish they had bought a few years ago. And, think about how many had wished they sold it while it was at an all-time high. That’s always the case – clients always wish they had done something a year ago.

 

So here’s my question: What will you wish you had done this year when you look back at your business next year? 

 

One Possible Answer

Pension risk transfer is an opportunity to drive revenue in your practice for 2018 and beyond. However, many are reluctant to pursue this market because it has a long gestation period before you receive revenue or commission. I think there are several reasons to evolve your financial planning practice to include pension risk transfers:

 

  • Current tax law allows companies to make deductible contributions to their 2017 pension shortage at the higher tax rate of 35 percent. This equates to a 14 percent discount for applying contributions to the pension shortage in 2018.
  • With our recent strategic partnership, Ash Brokerage can provide fee income to financial advisors before product is placed and while the company completes the termination process. 
  • More and more large companies are taking advantage of shifting pension risk to insurance companies. Small and midsized companies tend to follow larger corporations, and most pension assets rest with small businesses. 
  • Bond yields will likely change dramatically over the next 36 months, putting pressure on the fixed income portion of the investment portfolio. The same can be said for the recent volatility in the equity markets. It makes it difficult for plan sponsors to manage the risk for investment yields. 
  • Life expectancies continue to increase for older workers. That puts more obligation on the plan assets to provide lifetime income to the plan participants. That translates into more risk for the plan sponsor. 

 

Economic and tax climates make it a great time to talk about pension risk transfers. If you don’t begin integrating it into your practice today, you will likely look back a year from now and say that you wished that you done so. Don’t be wishing you had done something a year ago that is now costing you business. Take a good look at pension risk transfers as a larger part of your business. 

 

Winning Strategy

Don’t look back a year from now and wish you had added pension risk transfers to your business. The climate is ripe to take advantage of a business opportunity that might not come by again. 

Policy Review - 10 Ideas For Existing Life Insurance

Craving More?

Watch the replay of our webinar where we talk how pension risk transfers can be an effective tool for defined benefit plan sponsors seeking solutions for rising costs and longevity risk.

Watch Now

 

About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of retirement at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”

Retirement Pension Risk Transfer Practice Management

Why You Must Be Willing to Receive in Order to Give


Annuities

The title might seem a little confusing. The concept of being willing to receive is confusing, at best. 

 

All this month, we have talked about the Go-Giver Laws of Stratospheric Success.1 All of the Go Giver laws are within our control. The “Law of Receptivity” is no different. Staying open to opportunities might seem easy on the surface, but it might be the most difficult. 

 

Take Notice

When I was a child, my parents bought it the Volkswagen Beetle fad of the early ’70s. The little cars were fun to drive and got great gas mileage. I loved the rumble seat in the back of the car where my brother and I rode to kindergarten and grade school. The trunk was in the front of the car while the engine was in the back. So the rumble seat truly rumbled! 

 

The McGlothlin family Volkswagen was a bright orange Beetle. You could see us coming for miles. When dad brought “Herbie” home from the dealership, we thought we had the only orange VW in Indianapolis. But, as we drove around the highway and even around our smaller community in central Indiana, we noticed a lot of orange VW Beetles. I’m sure you can say the same thing for your car. You never really noticed another until you bought one. Then, all of a sudden, they’re everywhere. 

 

Being open to receiving is similar. You’re always looking out for others, solving their dilemmas, and adding value to the relationship. Adding value will always be followed by someone giving to you. You don’t recognize it until after it is happening, just like you don’t see the orange Beetle until you’ve bought it. 

 

Breathe Through It

The natural flow of business is an exchange of value. This is usually done in dollars for service or a product. But, receiving is much more than that. Receiving can be a simple “thank you” for doing something special. It can be a mutually beneficial business relationship. It can come in many shapes and sizes, but you’ll know it when you receive it. And, you must be willing to receive it in order to continue giving properly. In “The Go-Giver,” breathing is used as an analogy for giving and receiving. You must exhale in order to inhale and vice versa. 

 

It’s important to always remember that receiving isn’t a scoreboard – nothing about the Laws of Stratospheric Success is a scoreboard. You can never count your chips by how much time, energy and value you have provided. You can’t think that you are “owed” something in return. Instead, it will flow naturally, maybe even you least expect it. 

 

Winning Strategy

Be open to success. Don’t expect it. Earn it. But always be open to it. 

 

About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of retirement at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”

 

1Bob Burg and John David Mann, “The Go-Giver: A Little Story About a Powerful Business Idea”: https://thegogiver.com/

Receiving Practice Management The Go-Giver Retirement

Now is the Best Time to Be … YOU


Annuities

This is the most incredible time in our industry to be a human … any human … well, actually, you! While there is a preponderance of online software, no one can deliver the value of real, authentic human beings. 

 

Technology competes largely on price. Software can calculate retirement income for less money, or help people manage their own finances for half the cost. But, when you compete on price, you roll the dice. While technology might do some things well, it can’t compete with everything you can do. 

 

  • You can look people in the eye and talk to them about the harsh realities of longevity
  • You can help others overcome the emotional roadblocks to improving their savings and income planning
  • You can explain how everything will be OK if a spouse dies unexpectedly
  • You can protect an entire family and discuss options to transfer business ownerships, retirement plans, and long-held family assets
  • You can ask insightful questions to find the real reasons a person is investing 

 

Our industry’s true value is all of us – the unique individuals who take time to fully understand the needs and desires of our clients and prospective clients. As Bob Burg and John David Mann explain in “The Go-Giver,” authenticity is your best asset.1 Each of us brings a unique talent to the table. You can ill-afford to be another robo-advisor focused on pure numbers, beating the benchmarks by a couple basis points, or having slightly lower fees. 

 

Your clients want more. They want you. They want someone who will look them in the eye and say, “You are going to be fine. We are going to take care of you.” Don’t try to compete against a custodian or a large financial institution – just be yourself and you will find people who want that interaction.

 

Winning Strategy

You are your best asset. Don’t try to be something you’re not. Surround yourself people who complete your financial practice. But, most importantly, be yourself within your network and in your client interactions. It’s your best differentiation.  

 

About the Author

Mike McGlothlin is a tireless advocate for the retirement planning industry. As executive vice president of retirement at Ash Brokerage, he heads a team providing income planning solutions focused on longevity and efficiency. He’s also a thought leader who provides guidance and assistance for advisors and broker-dealers navigating marketplace and regulatory changes. You can find a collection of his blog posts in his book, “Above the Clouds … Winning Strategies from 30,000 Feet.”

 

1Bob Burg and John David Mann, “The Go-Giver: A Little Story About a Powerful Business Idea”: https://thegogiver.com/

Authenticity Practice Management The Go-Giver Retirement